The Central Bank chief said there was no basis for the controversy.
The Central Bank of Nigeria, CBN, Governor, Lamido Sanusi, has described the recent controversy surrounding Nigeria’s management of its excess crude revenue savings and external reserves as unnecessary, saying the Federal Government used part of the savings in the Excess Crude Account, ECA, to finance the controversial petroleum subsidy payments.
Payments by the Federal Government for subsidy on petroleum products supply and distribution, which was only N290 billion in 2009 rose astronomically in controversial circumstances to about N2.1 trillion in 2011, resulting in a national protest by Nigerians in January 2012 after the government announced a hike in the price of petrol.
A former Vice President of the World Bank, Oby Ezekwesili, had, during the 42nd convocation of the University of Nigeria, Nsukka, criticised the Federal Government for mismanaging the huge earnings that accrued in the ECA during the Olusegun Obasanjo administration, which was handed over in 2007 to late President Umaru Yar’Adua’s administration and inherited by the present administration.
Ms. Ezekwesili said that Nigeria’s balance in the foreign reserve account during the period was about $45 billion, while the ECA had a savings of about $22 billion, pointing out that just “six years after, Nigerians, especially the poor, continue to suffer the effects of failing public health and education systems as well as decrepit infrastructure and battered institutions, despite such humongous national wealth.”
But, speaking on Tuesday in Lagos as guest speaker at the Metropolitan Club’s forum, Mr. Sanusi dismissed insinuations of mismanagement of ECA and the external reserves, insisting that never had the external reserves overshot the $67 billion mark during late President Umaru Yar’Adua’s administration.
According to him, the highest the external reserves recorded during Mr. Yar’Adua’s regime was about $62 billion, pointing out that the controversy surrounding the matter was unnecessary.
The CBN governor attributed the decline in the country’s reserves to exigencies that required urgent intervention, saying that governments worldwide spend part of their reserves whenever the need arises to solve problems of national importance.
“You save money when prices of (crude) oil are high, and you spend when prices are low,” the CBN governor said. “It is part of the excess crude account that we (government) used to finance the oil subsidy.”
On external reserves, Mr. Sanusi said the spending from the account by the government was transparent and could be accounted for, adding that the CBN was working with the Federal Ministry of Finance to block all leakages in the system that may result in the country losing revenue.
The CBN governor, who identified corruption as one of the major problems the country is facing, said that the on-going reform by the present administration in all sectors was designed to help restore the economy on a sound footing in future.
He urged Nigerians to join hands in the fight against corruption in all areas of the economy, saying this was responsible for the distortion and destruction to the economy.
He said the reform agenda in the banking sector is already yielding positive results, pointing out that the campaign needs to be replicated in all other sectors of the economy, as it is not only banks that have corrupt people.
Mr. Sanusi noted that the CBN’s intervention in critical sectors of the economy was already having positive impact in the power and agricultural sectors, pointing out that beyond its core functions, the apex bank has the responsibility to grow other sectors of the economy.
“Banks must play their intermediation role in assisting the real economy for the creation of jobs,” he said, adding that stability in the financial market showed that the banking sector had achieved milestones in that role.
“Part of the milestones is the inflation rate standing at a single digit since last year; stable exchange rate and the rising reserves,’’ he said.
The Central Bank Governor, however, frowned at the over-reliance on oil, which accounts for over 80 per cent of the nation’s revenue, noting that conscious efforts should be made by all stakeholders to diversify the country’s economic base.